Is Google a threat? This was a hot topic during the Mobile Search Masterclass, and I encourage your feedback.

In a nutshell, the debate centered on whether Google – given the popularity of Google Maps and the utility of its recent upgrade (which Andrew Grill explores in this post) – will ultimately dominate location search and services. With rumors circulating that Google may soon open up its Cell-ID database API to third parties, it’s not only possible – it’s highly probable that Google will dethrone the mobile operators who have long been in charge of this information and in search of a model by which to monetize it.

If (or shall I say when?) this happens, would operators merely be getting the payback they deserve? Their combined greed or lack of vision (or both) has made location look-ups prohibitively expensive for the growing number of developers, brands, and providers jockeying to offer location-based services or proximity-based advertising. (Location checks are equivalent in price to SMS messages. Checking where users are, just in case they might want content or be in buy-mode, several times an hour will drive a company bankrupt.)

Kudos to Andrew Grill for an insightful and entertaining presentation that tells us all – once and for all – why the Starbucks example (using network-based polling) is nonsense.

Assume the following campaign:

• 50,000 opt-in users
• 2 week campaign (Mon-Fri) = 10 days
• 8 hour window (8am – 4pm)
• Check location every 5 minutes by operator cell-ID
• Assume €0.126 per poll

What would this cost? A WHOPPING 6 MILLION EUROS! Even doing two polls an hour instead of every 5 minutes would still cost over €1 million. Do the math, and it’s easy to see why operator-independent location – and the players that provide it – is the one to watch.

Little wonder that these independent services that offer approximate location information (Google, Fire Eagle from Yahoo, and Loki from Skyhook Wireless) are finding their fans among companies determined – and rightly so – to bake location into their location search and services.
Andrew points out that the real excitement is about mashups such as Sniff on Facebook, and Brightkite on Twitter. Once again, Andrew has his finger on the pulse and I’m sure his next MSG column (after a short summer break) will showcase these and more super-cool location-aware services…His last column rocks!

But it’s not about cool services; it’s about viable and affordable alternatives to operator look-ups and the impact on the larger mobile industry. As one Masterclass participant pointed out: “There is still a significant gap in the market between reasonably-priced, low-accuracy Cell-ID location, and high-accuracy GPS. Google is helping to plug this gap.”

Will Google use its leading market position to charge for location lookups, maintaining the status quo with mobile operators?

Or will Google borrow a page from Wikinomics and secure a central spot for itself in the value-creation Web by offering location for free?

Don’t worry that Google may have to give away something for nothing. If we examine Google’s track record, offering services for free (think Gmail and YouTube) only to monetize them later through advertising is core to the company’s modus operandi.

It’s impossible to divine Google’s intentions at this moment in time, but there is no doubt that Google could initiate a step change in mobile location services, search, and advertising. Opening up its Cell-ID database API to third-party developers would allow Google to unleash and direct a flood of innovation and services that would result when everyone everywhere in the mobile space could by-pass the operators to location-enable their offers.

What can mobile operators do?

They can start by trading in command and control for connect and cultivate. Then, once they have internalized this mindset they can shift their internal structures to provide value-add services (location) to off-portal players – before someone else (think Google) does it first.

This entry was posted on Monday, July 28th, 2008 at 2:56 pm and is filed under Local Search, Location-based services, Mobile Search, Mobile Social Networking. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.